Typical Credit Card Processing Costs

Typical credit card processing fees range from 2% – 2.5% for retail businesses that swipe the majority of their credit cards, to 2.25% to 3.50% or more for e-commerce and mail-order businesses.

There are several variables that can dramatically impact a business’s average processing costs, so these general numbers should be taken with a grain of salt. If you’re interested in calculating a more accurate cost average for your business, consider the following variables in your calculation.

How are cards processed?

Businesses generally process credit cards as card-present or card-not-present. As the names imply, card-present refers to the act of physically swiping a customer’s credit card through an electronic reader, and card-not-present refers to the act of processing a card when it’s not physically present.

Card-present businesses are perceived as lower risk, so they pay lower Visa and MasterCard interchange fees. They also have lower equipment costs since third-party software or gateways aren’t necessary to route transactions over the internet.

As you can see from the previously linked interchange schedules, the average base cost for a card-present business is generally 1.60% – 1.90% depending on the mix of debit cards versus credit cards, and standard credit cards versus reward cards. High Risk Credit Card Processing

Card-not-present businesses have higher costs because their method of processing cards carries greater risk. Accordingly, they pay higher interchange fees, and also have additional costs associated with third-party software and gateway providers.

Typical interchange fees and gateway costs range into the 2.25% – 3.00% range for card-not-present businesses.

How much will your business process?

Your business’s gross credit and debit card sales have a direct impact on average processing expense. Monthly and annual fees have an especially large affect on average costs when monthly processing volume is low.

For example, a flat monthly fee of only $10 accounts for a solid 1% of gross sales for a business that processes $1,000 a month. When other processing charges from interchange and the processor’s markup are added, the total percentage will likely be 4% – 5%.

Similarly, a business with the same flat monthly fee of $10 that processes $10,000 a month only dedicates 0.10% of sales toward paying the fee.

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